April industrial output growth witnesses a sharp decline

India’s industrial output growth almost stalled in April compared with a year earlier, reinforcing expectations the RBI will cut rates next week to try to combat a slowdown in the economy, reports the Business Standard.

The government data showed that output rose just 0.1 per cent in April, lower than expectations in a Reuters poll for a 1.7 per cent increase. Output fell in March from a year earlier by 3.5 per cent.

“The data clearly points to industrial growth being extremely weak,” said Abheek Barua, chief economist at HDFC Bank in New Delhi. “It is in clear need of monetary as well as fiscal support.”

High inflation and interest rates, a lack of government initiative and the euro area debt crisis have weighed on Asia’s third biggest economy for more than a year. Annual GDP growth hit its weakest pace in nine years in the first three months of calendar 2012.

The slump in January-March GDP growth to 5.3 per cent sparked alarm in industry and calls for the government and the central bank to take action to revive the fortunes of an economy that was expanding closer to 10 per cent a year before the global financial crisis.

That has spurred expectations the Reserve Bank of India will cut its repo rate by 25 basis points to 7.75 per cent, adding to a 50 bps cut in April.

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